Microsoft Strikes 2 Record-Breaking Carbon Credit Deals
Microsoft has entered into a groundbreaking agreement with BTG Pactual Timberland Investment Group (TIG), committing to provide 8 million carbon removal credits, marking the largest carbon dioxide removal transaction on record.
In a separate deal, Microsoft also agreed to buy 40,000 agricultural soil carbon credits from Indigo Ag. It’s also the largest-ever purchase of an individual buyer from the ag company.
A Landmark Carbon Offset Agreement
Carbon offsets allow companies to compensate for some of their greenhouse gas emissions by funding projects that reduce emissions elsewhere. Each carbon offset credit corresponds to reducing one tonne of CO2 emissions and can be applied toward reaching corporate climate targets.
Last year, companies retired or used almost 180 million metric tonnes of CO2 equivalent in their climate commitments.
The agreement between TIG and Microsoft involves the provision of up to 8 million nature-based carbon removal credits by 2043. Data from MSCI Carbon Markets confirms this as the largest transaction of its kind.
The credits are part of TIG’s extensive reforestation and restoration strategy in Latin America. It involves a $1 billion initiative designed to conserve and restore deforested areas, including the crucial Cerrado biome in Brazil.
The strategy aims to restore 135,000 hectares of natural forests and develop sustainable commercial tree farms on an additional 135,000 hectares.
TIG has already made significant progress, investing in 37,000 hectares, planting over 7 million seedlings, and beginning the restoration of 2,600 hectares of natural forest.
Gerrity Lansing, Head of TIG, highlighted the importance of this groundbreaking carbon offset deal, saying:
“Institutional investors have a critical role to play in delivering nature-based solutions at a scale that matters for climate and biodiversity. The scale of the native forest restoration and sustainable timber production that TIG seeks to deliver with our reforestation strategy is what enables a carbon removal credit transaction of this size.”
Microsoft’s Unwavering Support for Carbon Removal
Dr. M. Sanjayan, Conservation International CEO, emphasized that Microsoft’s commitment demonstrates the possibility of balancing ecological restoration with economic productivity.
The transaction aligns with Microsoft’s ambitious goal to be carbon-negative by 2030 and to remove all historical emissions by 2050. The tech giant aims to eliminate its Scope 1 and 2 emissions through various means, including:
Increasing energy efficiency,
Decarbonizing its operations, and
Achieving 100% renewable energy by 2025.
The company achieved a 6% reduction in its Scope 1 and 2 emissions from the 2020 baseline year.
Source: Microsoft website
However, the Scope 3 (value chain emissions) sources account for over 96% of Microsoft’s total emissions. The majority of these emissions come from purchased goods and services, capital goods, downstream, and the use of sold products. Reducing value chain emissions involves investing in large-scale, high-quality carbon removal projects.
Brian Marrs, Senior Director for Energy & Carbon Removal at Microsoft, noted that achieving these goals requires innovative projects that can scale carbon removal swiftly and sustainably. He highlighted that this nature-based project exemplifies how such efforts can deliver significant carbon removal while restoring vital ecosystems.
In a related effort, Microsoft recently purchased 970,000 forest carbon removal credits from Anew Climate, further demonstrating its commitment to large-scale carbon removal projects.
The carbon credits under Anew agreement will come from improved forest management (IFM) projects across forestlands owned by Aurora Sustainable Lands, Acadian Timber Corp., and Baskahegan Company. IFM projects offer benefits such as avoiding net carbon emissions and removing carbon from the atmosphere.
The Anew projects will create registry-recognized carbon removal credits generated from tree growth within its forestry portfolio.
Additionally, Microsoft, alongside Google, Meta, and Salesforce, has launched a 20-million-ton advance market commitment (AMC) collaboration to support the development and expansion of the nature-based carbon removal market.
Advancing Soil Carbon Removals
Most recently, Microsoft has agreed to purchase 40,000 agricultural soil-based carbon credits from Indigo Ag’s third carbon crop. This transaction marks the largest number of credits ever delivered by Indigo Ag to a single buyer.
These soil-based credits are verified and issued by the Soil Enrichment Protocol of the Climate Action Reserve, one of the world’s most trusted independent carbon registries.
Microsoft has chosen Indigo Ag’s carbon program to introduce soil carbon removals into its climate action portfolio. This agreement highlights the demand for robust, science-backed agriculture soil-based credits and their critical role in climate action, reflecting the increasing maturity of the voluntary carbon market.
Indigo Ag’s Carbon program is supported by the company’s scientifically peer-reviewed measurement, reporting, and verification (MRV) capabilities, ensuring the robustness, integrity, and durability of credits. This enables growers to realize the value of adopting and sustaining new practices that generate these credits.
Indigo Ag Carbon Program
Beyond its carbon program, Indigo Ag deploys its MRV capabilities to help companies in the agri-food value chain reduce their Scope 3 emissions. It can also help them produce low carbon intensity crop feedstocks for biofuels.
To date, Indigo’s Sustainability Solutions have reduced and removed over 340,000 tons of GHG emissions and saved over 19 billion gallons of water used in agriculture.
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Dean Banks, CEO of Indigo Ag, remarked:
“Today’s announcement is a major milestone for Indigo’s Carbon program and our increasing range of ag-based sustainability solutions. Microsoft is a leader in corporate climate action, a highly influential player in carbon removals and shares our commitment to support the transition to a more resilient and sustainable agriculture system.”
The landmark transactions between Microsoft and TIG as well as Indigo Ag underscore the potential for significant climate action through nature-based solutions. By advancing carbon removal at scale, Microsoft is paving the way for a more sustainable and low-carbon future.
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